33. Liabilities due to employee benefits

Based on an arrangement entered into by the representatives of staff and the Group, its employees are entitled to specific benefits other than remuneration, i.e.:

• jubilee bonuses;
• retirement and disability benefits;
• electricity allowance;
• an appropriation to the Company’s Social Benefits Fund.

All mentioned above benefits are fully financed by the Group.

The present value of the related future liabilities has been measured using actuarial methods. Calculations were made using basic individual data for the employees of ENEA Group as at 31 December 2015 (taking into account their gender) regarding:

• age;
• length of service with ENEA Group;
• total length of service;
• remuneration constituting the assessment basis for jubilee benefits as well as retirement and disability benefits.

Additionally, the following assumptions were made for the purpose of the analysis:

• the probable number of leaving employees was determined based on historical data concerning staff turnover in the Group and industry statistics,
• the value of minimum remuneration in the Polish economy since 1 January 2016 was assumed at PLN 1 850.00 thousand,
• pursuant to announcements of the Chairman of the Central Statistical Office, the average salary in the Polish economy, less premiums for retirement, pension and health insurance paid by the insured was assumed at PLN 2 917.14 (average amount assumed for the second half of 2010, which will constitute the basis for calculating the appropriation to the Company’s Social Benefits Fund in 2014 under the amendment to the Act on Company Social Benefits Fund dated 5 December 2014),
• under the assumptions defined at the corporate level, the growth of the average salary in the Polish economy (being the basis for creating the appropriation to the Company’s Social Benefits Fund) was assumed at 20.2% in 2015, 5.4% in 2016, 6.1% in 2017, 6.2% in 2018, 6.0% in 2019, 5.7% in 2020, 5.5% in 2021, 5.3% in 2022, 5.1% in 2023, 4.9% in 2024, 4.7% in 2025 and 4.5% in the remaining period of the projection,
• mortality rate and the probability of receiving benefits were adopted in line with the 2013 Life Expectancy Tables published by the Central Statistical Office,
• the value of the provision for disability benefits was not determined separately but the individuals receiving disability allowance were not taken into consideration in calculating the employee turnover ratio,
• standard retirement age was assumed under particular regulations of the Act of Pension, excluding these employees, which fulfill the conditions expected to earlier retirement,
• the long-term salaries and wages increase rate was adopted at the level of 2.038% in 2016, 2.418% in 2017 and 2.5% in the remaining years (as at 31 December 2014 at the level of 1.0% in 2015, 2.038% in 2016, 2.418% in 2017 and 2.5% in the remaining years),
• the interest rate for discounting future benefits was adopted at the level of 2.8% (as at 31 December 2014: 2.5%),
• value of the annual equivalent of the electricity allowance paid in 2015 was adopted at the level of PLN 1,406.53 (as at 31 December 2014 PLN 1,382.57),
• the average rise in the cash equivalent of the electricity allowance was adopted for 2016at the level of -3.2%, for 2017 -1.5%, for 2018 +1.7%, for 2019 +4.1 %, for 2020-2021 at the level of 4.2%, for 2022 +4.3%, for 2023 +4.4%, for 2024 +4.5%, for 2025-2026 +4.6% and the following years at the level of 2.5% (as at 31 December 2014 the increase in 2015 at the level of 1.6%, for 2016 +4.0%, for 2017 +4.9%, for 2018 +5.9%, for 2019- 2026 at the level of 3.9% and the following years at the level of 2.5%).

The Group also recognizes provision for coal allowance benefits.

To determine the amount of provisions for employee benefits Projected Unit Credit Method was used, the same method was used for the analysis of sensitivity for defined benefit plan.

Sensitivity analysis for defined benefit plans

Sensitivity analysis for the following segments: trade, distribution, production and other:

Sensitivity analysis for mining segment:

Maturity of liabilities due to defined benefit plans

Maturity of liabilities due to defined benefit plans for the following segments: trade, distribution, production and other:

Maturity of liabilities due to defined benefit plans for mining area:

Other long-term employee benefits - jubilee bonuses

Provision for the Voluntary Redundancy Program

ENEA S.A.

On 10 December 2014 the Management Board of ENEA S.A. adopted a resolution to launch the Voluntary Redundancy Program (Program). The Program was dedicated to Employees:

• employed under a contract of employment no matter the type and nature of their work;
• not being in the period of notice and who have not signed an agreement to terminate the employment contract outside the Program with a date of an employment contract in the future;
• not being employed on other civil or employment contracts in another entity within ENEA Group as at the date of employment contract termination within the Program;

belonging to one of the following groups:

• Group no. I – Employees have reached a standard retirement age till 31 December 2014 and did not terminate the employment contract due to retirement or will acquire pension rights arising from achieving standard retirement age till 31 December 2015;
• Group no. II - Employees who are to achieve the standard retirement age within 3 year inclusive, counting from 31 December 2015;
• Group no. II - Employees who are to acquire pension rights after 31 December 2018.

The program was valid from 15 December 2014 until 30 June 2015.

ENEA Centrum Sp. z o.o.

On the basis of a resolution No. 187 dated 22 December 2015, the Management Board of ENEA Centrum Sp. z o.o. decided to launch the next Voluntary Redundancy Program in the Company valid from 28 December 2015 to31 December 2016 in quartarely tranches, which can be launched on the basis of relevant resolutions of the Management Board of ENEA Centrum Sp. z o.o.The first tranche of the Program is valid from 15 February 2016 to29 February 2016. The decisions for the first tranche of the Program will be taken by the Employer in the period from 1 March 2016 till 31 March 2016.